Finance

[Christina82]

The review is making me feel stupid...

Isn't the formula for finding P: P=A/(1+r/m)^mt ????

I am coming up with the wrong answer:

Goal: 19700
Interest annual: 6.6%
Compounded Weekly
3 years

To find the principle, don't I use the above formula as follows:

P=19700/(1+.066/48)^3(12)

 

[galactus]

m is the number of interest periods in a year. In this case, 52.

Try \(\displaystyle P=\frac{19700}{(1+\frac{.066}{52})^{3(52)}}\)

 

[Christina82]

Thanks!

Thank you for taking the time to help me out!

~Christina

 

[soroban]

Hello, Christina82!

Don't feel stupid . . . you just confused your units.

Isn't the formula for finding \(\displaystyle P:\L\;\;P\:=\:\frac{A}{(1\,+\,\frac{r}{m})^{mt}}\)

I am coming up with the wrong answer:

Goal: 19700
Interest annual: 6.6%
Compounded weekly
3 years

To find the principle, don't I use the above formula as follows:

\(\displaystyle \L\\;=\;\frac{19700}{\left(1\,+\,\frac{0.066}{48}\right)^{3(12)}}\;\) . . . no

Generally, it is accepted that: \(\displaystyle \text{1 year = 52 weeks}\).
\(\displaystyle \;\;\)So: \(\displaystyle \,\frac{r}{m}\,=\,\frac{0.066}{52}\)

And the number of <u>weeks</u> is: \(\displaystyle 3(52)\,=\,156\)


Try it again with: \(\displaystyle \L\\;=\;\frac{19700}{\left(1\,+\,\frac{0.066}{52}\right)^{156}\)

 

[Christina82]

Thank you very much

Soroban,

Thanks for posting. I can't believe that there are people like you who take time out of your day just to help poor souls like myself ;o) It's nice to know. I came across this site today by just typing in the search engine. I didn't actually think someone would be here to help! Thanks again!

Christina

 

[Gene]

Just so you know, we drop in when the spirit moves. You were extremely fortunate to get a response in 20 minutes. A couple hours is much more likely.
------------------
Gene

 

[Christina82]

I'm glad I posted at that time then!